EFG Hermes advising on $500m M&A deal in Saudi Arabia

An Egyptian man walks past a branch of the investment bank EFG Hermes in Cairo. EFG Hermes is also working on a number of IPOs with private companies in Egypt. (Reuters)
Updated 04 March 2019
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EFG Hermes advising on $500m M&A deal in Saudi Arabia

  • Saudi Arabia has made attracting greater foreign investment a key part of its economic Vision 2030 plan as it tries to diversify the economy away from its reliance on oil
  • EFG Hermes is one of the banks advising on the potential $1 billion listing of Fawaz Alhokair Group’s Arabian Centers Company expected in the second quarter

DUBAI: Egypt’s EFG Hermes is working on a $500 million merger and acquisition in Saudi Arabia and expects more deals to come out of the kingdom this year, especially from the private sector, its head of investment banking told Reuters.
Saudi Arabia has made attracting greater foreign investment a key part of its economic Vision 2030 plan as it tries to diversify the economy away from its reliance on oil.
The kingdom’s impending inclusion in the FTSE Russell emerging markets index this month is expected to draw billions of dollars of foreign fund flows.
“Saudi I think will be very busy,” Mohammed Fahmi said, on the sidelines of the bank’s investment conference in Dubai which is taking place this week.
“I’m seeing a lot of RFPs (request for proposals) coming from Saudi for IPOs... Private sector companies looking to go public, which I think is a valuable thing.”
The bank is also advising on an initial public offering (IPO) in Saudi Arabia, Fahmi said, but would not give any more details.
EFG Hermes is one of the banks advising on the potential $1 billion listing of Fawaz Alhokair Group’s Arabian Centers Company expected in the second quarter, Reuters has reported, although EFG has declined to comment on its role.
Another executive at EFG Hermes told Reuters in December that the investment bank was working on a major M&A deal in the health sector in Saudi Arabia.
In addition, Fahmi said there were deals underway in the automotive, banking, and facilities management sectors in the kingdom and in the United Arab Emirates.
In Egypt, EFG Hermes is working on a potential fourth quarter $300 million IPO, Fahmi said.
Another IPO for state-owned Alexandria Container and Cargo Handling may occur as soon as the second quarter of this year, Mohamed Ebeid, co-CEO of EFG Hermes Investment Bank told Reuters. EFG Hermes is managing the sale along with Citigroup.
Egypt this week revived its privatization program, which has lain dormant for more than a decade, with the sale of a 4.5 percent stake in tobacco monopoly Eastern Company, which EFG adivsed on.
EFG Hermes is also working on a number of IPOs with private companies in Egypt, Ebeid said, mostly on the industrial side.


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”